The intent of all this is to improve the fuel efficiency of transportation. At the present moment, while the efficiency of existing hydrogen-powered cars themselves is very high, the efficiency of the entire consumption path from the original energy source to the car's drive wheels is, as you say, lower than that of an ordinary gasoline-powered car.
Should engineers give up on hydrogen cars altogether, then ...?
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Probably. It seems to me that the whole "hydrogen economy" idea is mostly a scam. It seems to be a way for car companies to pretend to be environmental and receive government subsidies.
Hydrogen is not an energy source in the same way as oil is an energy source because there are not large reserves of hydrogen that can be extracted. Instead hydrogen must be generated using energy from another source. Hydrogen fuel cells are, in fact, just fancy batteries. Certainly, no one would say that batteries will be the energy of the future.
Hydrogen may find some use as a battery material, but I see no way hydrogen can used to make more energy efficient cars. Today, hydrogen is mainly obtained from oil, and no matter how advanced the technology, this transformation will lose energy. Using the oil energy directly is pretty well guaranteed to be more efficient.
While they cannot increase the efficiency of oil energy, fancy batteries like fuel cells could be used to reduce pollution. If the hydrogen is produced using electricity generated from reduced pollution fixed power plants, it might be possible to reduce total (or local) pollution. If that is the goal, the focus should be on designing cleaner power plants.
I'm also skeptical of claims that some car gets over 100mpg. Often these numbered are given for "plug-in hybrids" where only the gas usage is included, and the fixed power plant energy is not reported. This is extremely misleading. By that measure a pure electric gets infinite mpg. Not a useful comparison. Otherwise, these kinds of numbers would only be possible on extremely low power (and hence low weight) vehicles. Today's cars have way too much power, but these things are more like motorcycles.
In my view, the best way to reduce energy consumption while retaining individual cars would be to convince people to have a more sensible requirements. People are buying massive, overpowered cars ostensibly designed for off-road use to drive a few miles to and from work everyday. Car manufacturers have been competing to sell cars with more and more power that almost nobody needs. Clearly companies are trying to create artificial needs: witness the TV commercial slogan that promises that a new truck is, "Not more than you need, just more than you're used to."
-Alex
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